Lenders take flak over PPI

Payment protection industry pundits have slammed lenders for hijacking the industry and giving it a bad name.

Providers say the PPI industry has been taken over by big lenders and high street retail banks, and they predict the mortgage payment protection industry is in for the same fate if lenders aren’t stopped.

Shane Craig, managing director of Paymentcare, says: “The recent report from the Office of Fair Trading confirms what brokers and advisers know about PPI – that it is a product that has been hijacked by lenders to generate huge profits.”

The report found distribution is largely controlled by lenders and high street retail banks and prices for PPI differ greatly. It stated this cannot be accounted for by differences in quality.

Chris Traynor, managing director of Paymentshield, says: “Lenders typically charge more for MPPI than intermediary suppliers, and for customers to get the best value for money lenders must think about how to price their products. They are taking too much margin.”

Sue Anderson, spokeswoman for the Council of Mortgage Lenders, says: “MPPI is regarded more positively than the general PPI market in both the OFT interim report and the Financial Services Authority’s thematic work.

“Indeed, the FSA gave prime MPPI a relatively clean bill of health in terms of how it was being sold by lenders. Lenders and insurers are continuing to work to improve the quality and value of the products offered to customers.

She adds: “On MPPI, we have been reviewing the baseline specification and expect to make some modest but positive changes. It is wrong to see MPPI as the same as PPI.”